Eyeing a luxury car market expected to expand from 50,000 units in 2012 to up to 130,000 a year by 2016, Audi may set the pace to produce them locally.

Audi has previously produced the A3 (two generations back) at the Volkswagen plant in the state of Paraná. Adding Audi production again in Brazil would be quicker and easier than for rivals as it needs to refurbish an existing plant rather than build a new one.

With the end of European market Fox production, assembly space is available.

BMW will have its Santa Catarina state plant ready by late 2014.

Mercedes-Benz will decide next March on the latest shape of its operations in Brazil. Local gossip suggests an accord with Nissan which is building a 200,000-car plant.

This should be ready by mid-2014 but is facing delays due to environmental issues. If an accord with Daimler is agreed, it will not be the priority.

Brands with higher priced products get better treatment under the new Brazilian government automotive regime as long as annual output is limited to 35,000 units.

This is sufficient to meet, with some spare capacity, the expected demand.